China Blocks EU Nuctech Probe Using New Countermeasure Rules as EU Deficit Nears 95 Billion Euros
Updated
Updated · The Diplomat · Jun 1
China Blocks EU Nuctech Probe Using New Countermeasure Rules as EU Deficit Nears 95 Billion Euros
3 articles · Updated · The Diplomat · Jun 1
Summary
Beijing in May ordered Chinese entities not to assist an EU anti-subsidy investigation into security firm Nuctech, marking the first use of China’s new rules against what it calls unlawful extraterritorial jurisdiction.
The move comes as Brussels broadens economic-security measures toward China, including the proposed Cybersecurity Act and Industrial Accelerator Act, after EU officials said the trade and investment relationship is not sustainable.
EU concerns center on overcapacity and strategic dependence: first-quarter 2026 EU exports to China fell 7.5% while imports from China rose 2%, pushing the quarterly trade deficit close to 95 billion euros.
Chinese state-linked outlets have warned of retaliation against EU sectors such as cosmetics, wine, meat and luxury goods, and have floated tools including anti-discrimination probes, export controls and the Unreliable Entity List.
Despite the escalation, a European Chamber survey showed 68% of firms still found China harder to operate in, but that was 5 points better than a year earlier, hinting at a fragile improvement in business sentiment.
Caught between dueling laws, can European firms still operate legally in China?
Is Europe's 'de-risking' a necessary defense or a costly form of protectionism?
EU-China Trade Clash Escalates: Nuctech Probe Blocked, Billions at Stake in Regulatory Showdown
Overview
In May 2026, China formally blocked the European Union’s anti-subsidy investigation into Nuctech, a major Chinese security equipment firm. China’s Ministry of Justice declared the EU’s actions as improper extraterritorial jurisdiction and ordered Chinese entities not to cooperate, directly challenging the EU’s efforts to protect its internal market. Nuctech, which manufactures scanners for airports and ports in over 170 countries and was previously blacklisted by the U.S. for security concerns, has a growing presence in Europe. This move highlights escalating trade tensions and the clash between the EU’s regulatory ambitions and China’s defense of its national companies.